Payroll Gains in U.S. Probably Cooled in October

By Shobhana Chandra -
Nov 4, 2011

Employers probably took on fewer
workers in October, illustrating the “frustratingly slow”
recovery that led Federal Reserve Chairman Ben S. Bernanke to
say the U.S. central bank may need to take additional action,
economists said before a report today.

Payrolls climbed by 95,000 following a 103,000 September
increase, according to the median forecast of 91 economists
surveyed by Bloomberg News. The jobless rate was 9.1 percent for
a fourth consecutive month, the figures may show.

The crisis in Europe and looming deadline on U.S. budget
talks may be prompting companies to hold back on concern failure
to reach resolutions will put the global recovery at risk. Fed
policy makers project the jobless rate won’t drop under 8
percent until 2013 at the earliest, one reason why Bernanke this
week said more stimulus “remains on the table.”

“It’s painfully slow healing,” said Ryan Sweet, a senior
economist at Moody’s Analytics Inc. in West Chester,
Pennsylvania. “The outlook really hinges on improvement in
hiring to support faster consumer spending. The odds favor
another round of monetary easing.”

The Labor Department’s report is due at 8:30 a.m. in
Washington. Bloomberg survey estimates ranged from increases of
50,000 to 150,000.

Estimates in the Bloomberg survey for the unemployment rate
ranged from 8.9 percent to 9.2 percent.

Elevated Unemployment

The jobless rate has exceeded 8 percent since February
2009, the longest stretch of such levels of unemployment since
monthly records began in 1948.

Private payrolls, which exclude government jobs, rose
125,000 after a gain of 137,000 in September, economists
forecast the Labor Department figures will also show.

The projected gain in total employment would bring the
average for July through October to 96,000, compared with
131,000 in the first six months of the year.

Sustained increases of around 150,000 a month are needed to
bring unemployment down about half a percentage point over a
year, according to Chris Rupkey, chief financial economist at
Bank of Tokyo-Mitsubishi UFJ Ltd. in New York.

Through September, the economy had recovered about 2.09
million of the 8.75 million jobs lost as a result of the 18-
month recession that ended in June 2009.

Faster hiring would spur bigger gains in incomes and
bolster confidence, helping cushion against declines in home
prices and allowing households to sustain their spending.
Purchases grew at a 2.4 percent annual rate in the third quarter
and the economy expanded at a 2.5 percent pace, the Commerce
Department reported last week.

Hiring and Firing

Retailers like Macy’s Inc. (M) are adding staff ahead of the
holidays, while companies including Whirlpool Corp. (WHR) plan to cut
workers, evidence of an uneven economic recovery.

Macy’s is among those betting last quarter’s gain in
spending will be sustained during the November-December shopping
season. The second-biggest U.S. department-store chain is
stepping up hiring of mostly part-time employees by 4 percent
for the period. Kohl’s Corp. (KSS), the fourth-largest U.S.
department-store chain, plans to add more than 40,000 holiday
workers, a 5 percent gain from 2010.

Whirlpool, the world’s largest maker of household
appliances, said it planned to cut more than 5,000 jobs and
trimmed its earnings forecast. The reductions will be primarily
within North America and Europe and include the closure of the
refrigeration manufacturing site in Fort Smith, Arkansas, by
mid-2012.

‘Challenging’ Environment

“We are taking necessary actions to address a much more
challenging global economic environment,” Chief Executive
Officer Jeff Fettig said in a statement on Oct. 28.

Stocks tumbled earlier this week after Greek Prime Minister
George Papandreou said he wanted to hold a referendum on
Europe’s rescue plan. Shares rallied over the past two days as
Greece moved closer to accepting a bailout and the European
central bank unexpectedly cut rates. The Standard & Poor’s 500
Index climbed 1.9 percent yesterday to close at 1,261.15.

Fed policy makers, who refrained from taking additional
steps to ease monetary policy at their meeting this week, said
in a statement that there are “significant downside risks to
the economic outlook.”

The central bank’s latest forecasts showed less optimism
about the economy and employment. Policy makers project growth
next year of 2.5 percent to 2.9 percent, with unemployment in
the 8.5 percent to 8.7 percent range. Joblessness in 2013 is
forecast at 7.8 percent to 8.2 percent.

Additional stimulus “remains on the table,” Bernanke said
at a Nov. 2 press conference in Washington, declining to specify
conditions that would prompt a move. “While we still expect
that economic activity and labor market conditions will improve
gradually over time, the pace of progress is likely to be
frustratingly slow.”